"Any group that has a portfolio of dealerships, if a store's not performing at the peak of the market, odds are it's not going to perform in the future, when things get worse," said Haig, president of Haig Partners in Fort Lauderdale, Fla.

Haig has seen large dealership groups thinning their portfolio of stores and "selling off the ones that don't fit either because they don't make that much money, or they're an outlier on the market, or they've lost confidence in the brand."

Still buying

In Penske Automotive's case, Penske said he still will consider strategic purchases in markets contiguous to its present stores. His purchase preference remains luxury and volume foreign brands, which together comprise 95 percent of the group's product mix.

Penske: Evaluate the profitability

"We're not going to go to new markets all of a sudden," Penske said, speaking this month on the sidelines of the Detroit auto show. "If there's a group available [in a new market], we might look at it, but the pricing on the good stuff is still pretty high."

Likewise, Penske Automotive, of suburban Detroit, will selectively buy real estate with its acquisitions. It currently owns about 10 to 15 percent of the land under its 294 dealerships globally. Penske said he prefers to not own the real estate, but there are pockets of the country where the mortgage rates are "quite attractive," so he said he is open to buying real estate on a situational basis.

In addition, if Penske Automotive's share price drops, Penske said, "I'm going to be a buyer." The company has $200 million available for repurchase, he said.

In short, it's a year for finding the best return on investment for the group's capital.

"We want to evaluate the profitability of each dealership; we want to look at what the capital expenditure requirements are by the manufacturers; we want to look at the market to see if it's growing or not and then take our capital and be very strategic," said Penske.

Used-only buys

Penske targets a flat to slightly lower acquisition rate this year compared with last.

"We bought a billion dollars in revenue last year, which is 5 percent of our total revenue, so I think you're going to have to look at 3 to 5 percent on acquisitions," Penske said. "That sets the stage for us, and it might be in our commercial truck business, it might be overseas, and it might be domestically — so we've got some good running room in those types of business."

Penske Automotive also will buy more used-only dealerships this year.

In December 2016, Penske announced the purchase of CarSense, which has five used-only stores in the Philadelphia, Pittsburgh and New Jersey markets. "We'll add at least one or two stores" in 2018, he said.

Last year, Penske bought CarShop's five used-only stores in the U.K. In December, the company said it will buy Car People, another used-only retailer in the U.K., with four locations.

The used-only dealerships cost about "30 to 40 percent less" than a premium luxury dealership in the U.S., Penske said. Combined, Penske's used-only stores are expected to sell about 60,000 vehicles a year. "It's big business for us," he said.

Penske ranks No. 2 on Automotive News' list of the top 150 dealership groups based in the U.S., with new-vehicle retail sales of 249,695 in 2016.